Unemployment aid applications drop to 358K

WASHINGTON (AP) -- Applications for U.S. unemployment benefits dropped 15,000 to a seasonally adjusted 358,000 last week, though the figure was distorted for the second straight week by California's efforts to clear backlogged claims.

The Labor Department says the less volatile four-week average rose 11,750 to 336,500.

Applications have jumped in the past two weeks, distorted by computer upgrades in two states and the 16-day partial government shutdown. Prior to those unusual factors, claims had reached pre-recession levels, a sign that companies are cutting very few workers.

California and Michigan continued to sift through backlogged claims held up by computer changes. Furloughed private-sector workers drove up applications by 15,000 two weeks ago. About 70,000 furloughed federal employees also sought benefits in the week ending Oct. 5, although those workers aren't included in the overall totals.

A government spokesman didn't say how the furloughs affected last week's figures.

The government opened for business on Thursday. Federal employees who receive back pay will likely have to reimburse the government if they claimed unemployment benefits during the two-week shutdown, although the law varies by state.

Before the government shutdown and California's backlog, applications had been trending lower and fell to a six-year low three weeks ago, thought that figure was pushed lower by California's delays.

Falling applications for unemployment benefits are typically followed by more hiring. But so far, there haven't been many signs of that happening.

The shutdown has delayed a raft of government data, including September's employment report. And it will likely affect hiring and weigh on the economic growth in the October-December quarter.

Several economists have cut their forecasts for fourth-quarter growth by half a percentage point to about 2 percent or lower.